[Federal Register Volume 85, Number 176 (Thursday, September 10, 2020)]
[Notices]
[Pages 55919-55923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20026]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33959A; 812-14997]


1WS Credit Income Fund, et al.

September 4, 2020.

AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under section 17(d) of the 
Investment Company Act of 1940 (the ``Act'') and rule 17d-1 under the 
Act permitting certain joint transactions otherwise prohibited by 
section 17(d) of the Act and under rule 17d-1 under the Act.

SUMMARY OF APPLICATION: Applicants request an order to permit certain 
closed-end management investment companies to co-invest in portfolio 
companies with each other and with affiliated investment funds.

APPLICANTS: 1WS Credit Income Fund (``1WS'' or the ``Existing Regulated 
Fund''), 1WS Capital Advisors, LLC (``1WS Capital'' or the ``Existing 
1WS Adviser''), the investment adviser to 1WS, on behalf of itself and 
its successors,\1\ One William Street Capital Master Fund, Ltd., OWS 
Credit Opportunity Master Fund, Ltd., OWS ABS Master Fund II, LP, OWS 
COF I Master, L.P., OWS ABS IV, LP, OWS Global Fixed Income Fund (USD-
Hedged), Ltd., OWS Credit Opportunity Fund, L.P., One William Street 
Capital Partners, L.P., One William Street Capital Partners II, L.P., 
One William Street Capital Offshore Fund, Ltd., OWS Capital Offshore 
Fund II, Ltd, One William Street Capital Intermediate Fund, L.P., OWS 
Credit Opportunity Offshore Fund, Ltd., OWS Credit Opportunity Offshore 
Fund II, Ltd, OWS

[[Page 55920]]

Credit Opportunity Offshore Fund III, Ltd, OWS Credit Opportunity 
Intermediate Fund, LP, OWS Credit Opportunity I, LLC, OWS COF I, Ltd., 
OWS ABS Fund II, Ltd. and OWS ABS Fund V, Ltd.
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    \1\ The term ``successor,'' as applied to the Adviser, means an 
entity that results from a reorganization into another jurisdiction 
or change in the type of business organization.

FILING DATES: The application was filed on January 11, 2019, and 
amended on May 21, 2019, June 17, 2019, May 29, 2020, and September 1, 
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2020.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by emailing the Commission's 
Secretary at Secretarys-Office@sec.gov and serving applicants with a 
copy of the request by email. Hearing requests should be received by 
the Commission by 5:30 p.m. on September 29, 2020, and should be 
accompanied by proof of service on the applicants, in the form of an 
affidavit, or, for lawyers, a certificate of service. Pursuant to rule 
0-5 under the Act, hearing requests should state the nature of the 
writer's interest, any facts bearing upon the desirability of a hearing 
on the matter, the reason for the request, and the issues contested. 
Persons who wish to be notified of a hearing may request notification 
by emailing the Commission's Secretary at Secretarys-Office@sec.gov.

ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicants: c/o 
Kurt A. Locher, 1WS Capital Advisors, LLC, legal@owslp.com.

FOR FURTHER INFORMATION CONTACT: Asaf Barouk, Attorney Adviser, at 
(202) 551-4029 or David Nicolardi, Branch Chief, at (202) 551-6825 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. 1WS is a Delaware statutory trust, registered as a non-
diversified, closed-end management investment company that has elected 
to operate as an interval fund pursuant to Rule 23c-3 under the Act. 
1WS' Objectives and Strategies \2\ are to seek attractive risk-adjusted 
total returns through generating income and capital appreciation. The 
Board \3\ of 1WS is comprised of 3 trustees, 2 of whom are Non-
Interested Trustees.\4\
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    \2\ ``Objectives and Strategies'' means a Regulated Fund's 
investment objectives and strategies, as described in the Regulated 
Fund's most current registration statement on Form N-2 or, as 
applicable, other filings the Regulated Fund has made with the 
Commission under the Securities Act of 1933 (the ``1933 Act''), or 
under the Securities Exchange Act of 1934, as amended, and the 
Regulated Fund's reports to shareholders.
    \3\ The term ``Board'' refers to the board of directors or 
trustees of any Regulated Fund.
    \4\ The term ``Non-Interested Trustees'' refers to the trustees 
of any Regulated Fund who are not ``interested persons'' within the 
meaning of section 2(a)(19) of the Act.
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    2. 1WS Capital is an investment adviser that is registered with the 
Commission under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). 1WS Capital is controlled by its sole managing member, One 
William Street Capital Management, L.P. 1WS Capital serves as 
investment adviser to 1WS and manages 1WS' portfolio in accordance with 
1WS' Objectives and Strategies.
    3. An Existing Affiliated Fund is an entity whose investment 
adviser is One William Street Capital Management, L.P., the managing 
member of 1WS Adviser and that would be an investment company but for 
section 3(c)(1) or 3(c)(7) of the Act.\5\
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    \5\ ``1WS Adviser'' means the Existing 1WS Adviser, or its 
managing member, One William Street Capital Management, L.P., and 
any current or future investment adviser that (i) controls, is 
controlled by, or is under common control with 1WS Capital, (ii) is 
registered as an investment adviser under the Advisers Act, and 
(iii) is not a Regulated Fund or a subsidiary of a Regulated Fund. 
The term ``Adviser'' means any 1WS Adviser.
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    4. Applicants seek an order (``Order'') to permit one or more 
Regulated Funds \6\ and/or one or more Affiliated Funds \7\ to 
participate in the same investment opportunities through a proposed co-
investment program (the ``Co-Investment Program'') where such 
participation would otherwise be prohibited under section 17(d) and 
rule 17d-1 by (a) co-investing with each other in securities issued by 
issuers in private placement transactions in which an Adviser 
negotiates terms in addition to price (``Private Placement 
Securities'') \8\ and (b) making additional investments in securities 
of such issuers, including through the exercise of warrants, conversion 
privileges, and other rights to purchase securities of the issuers 
(``Follow-On Investments''). ``Co-Investment Transaction'' means any 
transaction in which a Regulated Fund (or its Wholly-Owned Investment 
Sub (as defined below) participates together with one or more other 
Regulated Funds and/or one or more Affiliated Funds in reliance on the 
requested Order. ``Potential Co-Investment Transaction'' means any 
investment opportunity in which a Regulated Fund (or its Wholly-Owned 
Investment Sub) could not participate together with one or more 
Affiliated Funds and/or one or more other Regulated Funds without 
obtaining and relying on the Order.\9\
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    \6\ ``Regulated Fund'' means the Existing Regulated Fund and any 
Future Regulated Fund. ``Future Regulated Fund'' means any closed-
end management investment company (a) that is registered under the 
Act, (b) whose investment adviser is 1WS Adviser or its managing 
member, One William Street Capital Management, L.P., and (c) that 
intends to participate in the Co-Investment Program.
    \7\ ``Affiliated Funds'' means the Existing Affiliated Funds and 
any Future Affiliated Fund. ``Future Affiliated Fund'' means any 
entity (a) whose investment adviser is a 1WS Adviser, (b) that would 
be an investment company but for section 3(c)(1) or 3(c)(7) of the 
Act, and (c) that intends to participate in the Co-Investment 
Program.
    \8\ The term ``private placement transactions'' means 
transactions in which the offer and sale of securities by the issuer 
are exempt from registration under the 1933 Act, as amended.
    \9\ All existing entities that currently intend to rely upon the 
requested Order have been named as applicants. Any other existing or 
future entity that subsequently relies on the Order will comply with 
the terms and conditions of the application.
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    5. Applicants state that any of the Regulated Funds may, from time 
to time, form a special purpose subsidiary (a ``Wholly-Owned Investment 
Sub'').\10\ With respect to each Wholly-Owned Investment Sub, such a 
subsidiary would be prohibited from investing in a Co-Investment 
Transaction with any Affiliated Fund or Regulated Fund because it would 
be a company controlled by its parent Regulated Fund for purposes of 
rule 17d-1 of the Act. Applicants request that each Wholly-Owned 
Investment Sub be permitted to participate in Co-Investment 
Transactions in lieu of its parent Regulated Fund and that the Wholly-
Owned Investment Sub's participation in any such transaction be 
treated, for purposes of the Order, as though the parent Regulated Fund 
were participating directly.
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    \10\ The term ``Wholly-Owned Investment Sub'' means an entity 
(a) that is wholly-owned by a Regulated Fund (with the Regulated 
Fund at all times holding, beneficially and of record, 100% of the 
voting and economic interests); (b) whose sole business purpose is 
to hold one or more investments on behalf of the Regulated Fund; (c) 
with respect to which the Regulated Fund's Board has the sole 
authority to make all determinations with respect to the entity's 
participation under the conditions of the application; and (d) that 
would be an investment company but for section 3(c)(1) or 3(c)(7) of 
the Act. Any future subsidiaries of the Regulated Funds that 
participate in Co-Investment Transactions will be Wholly-Owned 
Investment Subs.
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    6. Applicants represent that this treatment is justified because a 
Wholly-Owned Investment Sub would have no purpose other than serving as 
a holding vehicle for the Regulated Fund's investments and, therefore, 
no conflicts of interest could arise between the Regulated Fund and the 
Wholly-Owned Investment Sub. The Regulated Fund's

[[Page 55921]]

Board would make all relevant determinations under the Conditions with 
regard to a Wholly-Owned Investment Sub's participation in a Co-
Investment Transaction, and the Regulated Fund's Board would be 
informed of, and take into consideration, any proposed use of a Wholly-
Owned Investment Sub in the Regulated Fund's place. If the Regulated 
Fund proposes to participate in the same Co-Investment Transaction with 
any of its Wholly-Owned Investment Subs, the Board will also be 
informed of, and take into consideration, the relative participation of 
the Regulated Fund and the Wholly-Owned Investment Sub.\11\
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    \11\ The participation of a Regulated Fund in a Potential Co-
Investment Transaction may only be approved by both a majority of 
the trustees of the Board who have no financial interest in such 
transaction, plan, or arrangement and a majority of such trustees of 
the Board who are Non-Interested Trustees (a ``Required Majority'') 
eligible to vote on that Co-Investment Transaction (the ``Eligible 
Trustees'').
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    7. When considering Potential Co-Investment Transactions for any 
Regulated Fund, the applicable Adviser will consider only the 
Objectives and Strategies, investment policies, investment positions, 
capital available for investment (``Available Capital''),\12\ and other 
pertinent factors applicable to that Regulated Fund. The Board of each 
Regulated Fund, including the Non-Interested Trustees, has determined 
that it is in the best interests of the Regulated Fund to participate 
in Co-Investment Transactions.\13\
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    \12\ The amount of each Regulated Fund's Available Capital will 
be determined based on the amount of cash on hand, existing 
commitments and reserves, if any, the targeted leverage level, 
targeted asset class mix and other investment policies and 
restrictions set from time to time by the Board of the applicable 
Regulated Fund or imposed by applicable laws, rules, regulations or 
interpretations.
    \13\ The Regulated Funds, however, will not be obligated to 
invest, or co-invest, when investment opportunities are referred to 
them.
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    8. Other than pro rata dispositions and Follow-On Investments as 
provided in Conditions 7 and 8, and after making the determinations 
required in Conditions 1 and 2(a), the Adviser will present each 
Potential Co-Investment Transaction and the proposed allocation to the 
Eligible Trustees, and the Required Majority will approve each Co-
Investment Transaction prior to any investment by the participating 
Regulated Fund.
    9. With respect to the pro rata dispositions and Follow-On 
Investments provided in Conditions 7 and 8, a Regulated Fund may 
participate in a pro rata disposition or Follow-On Investment without 
obtaining prior approval of the Required Majority if, among other 
things: (i) The proposed participation of each Regulated Fund and 
Affiliated Fund in such disposition or Follow on Investment is 
proportionate to its outstanding investments in the issuer immediately 
preceding the disposition or Follow-On Investment, as the case may be; 
and (ii) the Board of the Regulated Fund has approved that Regulated 
Fund's participation in pro rata dispositions and Follow-On Investments 
as being in the best interests of the Regulated Fund. If the Board does 
not so approve, any such disposition or Follow-On Investment will be 
submitted to the Regulated Fund's Eligible Trustees. The Board of any 
Regulated Fund may at any time rescind, suspend or qualify its approval 
of pro rata dispositions and Follow-On Investments with the result that 
all dispositions and/or Follow-On Investments must be submitted to the 
Eligible Trustees.
    10. No Non-Interested Trustee of a Regulated Fund will have a 
financial interest in any Co-Investment Transaction, other than 
indirectly through share ownership in one of the Regulated Funds.
    11. If the Adviser, the Principals,\14\ or any person controlling, 
controlled by, or under common control with the Adviser or the 
Principals, and the Affiliated Funds (collectively, the ``Holders'') 
own in the aggregate more than 25 percent of the outstanding voting 
shares of a Regulated Fund (the ``Shares''), then the Holders will vote 
such Shares as required under Condition 14.
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    \14\ Certain employees and principals of 1WS Adviser 
(collectively, the ``Principals'').
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Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
affiliated persons of a registered investment company from 
participating in joint transactions with the company unless the 
Commission has granted an order permitting such transactions. In 
passing upon applications under rule 17d-1, the Commission considers 
whether the company's participation in the joint transaction is 
consistent with the provisions, policies, and purposes of the Act and 
the extent to which such participation is on a basis different from or 
less advantageous than that of other participants.
    2. Applicants state that in the absence of the requested relief, in 
some circumstances, the Regulated Funds would be limited in their 
ability to participate in attractive and appropriate investment 
opportunities. Applicants believe that the proposed terms and 
conditions set forth in the application ensure that the proposed Co-
Investment Transactions are consistent with the protection of each 
Regulated Fund's shareholders and with the purposes intended by the 
policies and provisions of the Act. Applicants believe that the 
participation of the Regulated Funds in Co-Investment Transactions done 
in accordance with the Conditions would be consistent with the 
provisions, policies, and purposes of the Act and would be done in a 
manner that was not different from, or less advantageous than, the 
other participants.

Applicants' Conditions

    Applicants agree that the Order granting the requested relief shall 
be subject to the following Conditions:
    1. Each time a 1WS Adviser considers a Potential Co-Investment 
Transaction for an Affiliated Fund or another Regulated Fund that falls 
within a Regulated Fund's then-current Objectives and Strategies, the 
Regulated Fund's Adviser will make an independent determination of the 
appropriateness of the investment for such Regulated Fund in light of 
the Regulated Fund's then-current circumstances.
    2. (a) If the Adviser deems a Regulated Fund's participation in any 
Potential Co-Investment Transaction to be appropriate for the Regulated 
Fund, it will then determine an appropriate level of investment for the 
Regulated Fund.
    (b) If the aggregate amount recommended by the applicable Adviser 
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be 
invested by the other participating Regulated Funds and Affiliated 
Funds, collectively, in the same transaction, exceeds the amount of the 
investment opportunity, the investment opportunity will be allocated 
among them pro rata based on each participant's Available Capital, up 
to the amount proposed to be invested by each. The applicable Adviser 
will provide the Eligible Trustees of each participating Regulated Fund 
with information concerning each participating party's Available 
Capital to assist the Eligible Trustees with their review of the 
Regulated Fund's investments for compliance with these allocation 
procedures.
    (c) After making the determinations required in Conditions 1 and 
2(a), the applicable Adviser will distribute written information 
concerning the Potential Co-Investment Transaction (including the 
amount proposed to be invested by each participating Regulated Fund and 
Affiliated Fund) to the Eligible Trustees of each participating

[[Page 55922]]

Regulated Fund for their consideration. A Regulated Fund will co-invest 
with one or more other Regulated Funds and/or one or more Affiliated 
Funds only if, prior to the Regulated Funds' participation in the 
Potential Co-Investment Transaction, a Required Majority concludes 
that:
    (i) The terms of the Potential Co-Investment Transaction, including 
the consideration to be paid, are reasonable and fair to the Regulated 
Fund and its shareholders and do not involve overreaching in respect of 
the Regulated Fund or its shareholders on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) The interests of the shareholders of the Regulated Fund; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Funds or Affiliated 
Funds would not disadvantage the Regulated Fund, and participation by 
the Regulated Fund would not be on a basis different from or less 
advantageous than that of other Regulated Funds or Affiliated Funds; 
provided that, if any other Regulated Fund or Affiliated Fund, but not 
the Regulated Fund itself, gains the right to nominate a director for 
election to a portfolio company's board of directors or the right to 
have a board observer or any similar right to participate in the 
governance or management of the portfolio company, such event shall not 
be interpreted to prohibit the Required Majority from reaching the 
conclusions required by this Condition (2)(c)(iii), if:
    (A) The Eligible Trustees will have the right to ratify the 
selection of such director or board observer, if any;
    (B) the applicable Adviser agrees to, and does, provide periodic 
reports to the Regulated Fund's Board with respect to the actions of 
such director or the information received by such board observer or 
obtained through the exercise of any similar right to participate in 
the governance or management of the portfolio company; and
    (C) any fees or other compensation that any Affiliated Fund or any 
Regulated Fund or any affiliated person of any Affiliated Fund or any 
Regulated Fund receives in connection with the right of an Affiliated 
Fund or a Regulated Fund to nominate a director or appoint a board 
observer or otherwise to participate in the governance or management of 
the portfolio company will be shared proportionately among the 
participating Affiliated Funds (who each may, in turn, share its 
portion with its affiliated persons) and the participating Regulated 
Funds in accordance with the amount of each party's investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit 
the Adviser, the Affiliated Funds or the other Regulated Funds or any 
affiliated person of any of them (other than the parties to the Co-
Investment Transaction), except (A) to the extent permitted by 
Condition 13, (B) to the extent permitted by section 17(e) of the Act, 
as applicable, (C) indirectly, as a result of an interest in the 
securities issued by one of the parties to the Co-Investment 
Transaction, or (D) in the case of fees or other compensation described 
in Condition 2(c)(iii)(C).
    3. Each Regulated Fund has the right to decline to participate in 
any Potential Co-Investment Transaction or to invest less than the 
amount proposed.
    4. The applicable Adviser will present to the Board of each 
Regulated Fund, on a quarterly basis, a record of all investments in 
Potential Co-Investment Transactions made by any of the other Regulated 
Funds or Affiliated Funds during the preceding quarter that fell within 
the Regulated Fund's then-current Objectives and Strategies that were 
not made available to the Regulated Fund, and an explanation of why the 
investment opportunities were not offered to the Regulated Fund. All 
information presented to the Board pursuant to this Condition will be 
kept for the life of the Regulated Fund and at least two years 
thereafter, and will be subject to examination by the Commission and 
its staff.
    5. Except for Follow-On Investments made in accordance with 
Condition 8,\15\ a Regulated Fund will not invest in reliance on the 
Order in any issuer in which another Regulated Fund, Affiliated Fund, 
or any affiliated person of another Regulated Fund or Affiliated Fund 
is an existing investor.
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    \15\ This exception applies only to Follow-On Investments by a 
Regulated Fund in issuers in which that Regulated Fund already holds 
investments.
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    6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of 
securities to be purchased, settlement date, and registration rights 
will be the same for each participating Regulated Fund and Affiliated 
Fund. The grant to an Affiliated Fund or another Regulated Fund, but 
not the Regulated Fund, of the right to nominate a director for 
election to a portfolio company's board of directors, the right to have 
an observer on the board of directors or similar rights to participate 
in the governance or management of the portfolio company will not be 
interpreted so as to violate this Condition 6, if Conditions 
2(c)(iii)(A), (B) and (C) are met.
    7. (a) If any Affiliated Fund or any Regulated Fund elects to sell, 
exchange or otherwise dispose of an interest in a security that was 
acquired in a Co-Investment Transaction, the applicable Adviser will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest 
practical time; and
    (ii) formulate a recommendation as to participation by each 
Regulated Fund in the disposition.
    (b) Each Regulated Fund will have the right to participate in such 
disposition on a proportionate basis, at the same price and on the same 
terms and conditions as those applicable to the participating 
Affiliated Funds and Regulated Funds.
    (c) A Regulated Fund may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Fund and each Affiliated Fund in such 
disposition is proportionate to its outstanding investments in the 
issuer immediately preceding the disposition; (ii) the Board of the 
Regulated Fund has approved as being in the best interests of the 
Regulated Fund the ability to participate in such dispositions on a pro 
rata basis (as described in greater detail in the application); and 
(iii) the Board of the Regulated Fund is provided on a quarterly basis 
with a list of all dispositions made in accordance with this Condition. 
In all other cases, the Adviser will provide its written recommendation 
as to the Regulated Fund's participation to the Eligible Trustees, and 
the Regulated Fund will participate in such disposition solely to the 
extent that a Required Majority determines that it is in the Regulated 
Fund's best interests.
    (d) Each Affiliated Fund and each Regulated Fund will bear its own 
expenses in connection with any such disposition.
    8. (a) If any Affiliated Fund or any Regulated Fund desires to make 
a Follow-On Investment in a portfolio company whose securities were 
acquired in a Co-Investment Transaction, the applicable Adviser will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest 
practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including

[[Page 55923]]

the amount of the proposed Follow-On Investment, by each Regulated 
Fund.
    (b) A Regulated Fund may participate in such Follow-On Investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Fund and each Affiliated Fund 
in such investment is proportionate to its outstanding investments in 
the issuer immediately preceding the Follow-On Investment; and (ii) the 
Board of the Regulated Fund has approved as being in the best interests 
of the Regulated Fund the ability to participate in Follow-On 
Investments on a pro rata basis (as described in greater detail in the 
application). In all other cases, the Adviser will provide its written 
recommendation as to the Regulated Fund's participation to the Eligible 
Trustees, and the Regulated Fund will participate in such Follow-On 
Investment solely to the extent that a Required Majority determines 
that it is in the Regulated Fund's best interests.
    (c) If, with respect to any Follow-On Investment:
    (i) The amount of the opportunity is not based on the Regulated 
Funds' and the Affiliated Funds' outstanding investments immediately 
preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the applicable Adviser to 
be invested by the applicable Regulated Fund in the Follow-On 
Investment, together with the amount proposed to be invested by the 
other participating Regulated Funds and Affiliated Funds, collectively, 
in the same transaction, exceeds the amount of the investment 
opportunity, then the investment opportunity will be allocated among 
them pro rata based on each participant's Available Capital, up to the 
maximum amount proposed to be invested by each.
    (d) The acquisition of Follow-On Investments as permitted by this 
Condition will be considered a Co-Investment Transaction for all 
purposes and subject to the other Conditions set forth in the 
application.
    9. The Non-Interested Trustees of each Regulated Fund will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by other Regulated Funds or Affiliated Funds that the 
Regulated Fund considered but declined to participate in, so that the 
Non-Interested Trustees may determine whether all investments made 
during the preceding quarter, including those investments that the 
Regulated Fund considered but declined to participate in, comply with 
the Conditions of the Order. In addition, the Non-Interested Trustees 
will consider at least annually the continued appropriateness for the 
Regulated Fund of participating in new and existing Co-Investment 
Transactions.
    10. Each Regulated Fund will maintain the records required by 
section 57(f)(3) of the Act as if each of the Regulated Funds were a 
business development company (as defined in section 2(a)(48) of the 
Act) and each of the investments permitted under these Conditions were 
approved by the Required Majority under section 57(f) of the Act.
    11. No Non-Interested Trustee of a Regulated Fund will also be a 
director, general partner, managing member or principal, or otherwise 
an ``affiliated person'' (as defined in the Act) of an Affiliated Fund.
    12. The expenses, if any, associated with acquiring, holding or 
disposing of any securities acquired in a Co-Investment Transaction 
(including, without limitation, the expenses of the distribution of any 
such securities registered for sale under the 1933 Act) will, to the 
extent not payable by the Advisers under their respective investment 
advisory agreements with the Affiliated Funds and the Regulated Funds, 
be shared by the Regulated Funds and the Affiliated Funds in proportion 
to the relative amounts of the securities held or to be acquired or 
disposed of, as the case may be.
    13. Any transaction fee \16\ (including break-up or commitment fees 
but excluding broker's fees contemplated by section 17(e) of the Act, 
as applicable), received in connection with a Co-Investment Transaction 
will be distributed to the participating Regulated Funds and Affiliated 
Funds on a pro rata basis based on the amounts they invested or 
committed, as the case may be, in such Co-Investment Transaction. If 
any transaction fee is to be held by an Adviser pending consummation of 
the transaction, the fee will be deposited into an account maintained 
by such Adviser at a bank or banks having the qualifications prescribed 
in section 26(a)(1) of the Act, and the account will earn a competitive 
rate of interest that will also be divided pro rata among the 
participating Regulated Funds and Affiliated Funds based on the amounts 
they invest in such Co-Investment Transaction. None of the Affiliated 
Funds, the Advisers, the other Regulated Funds or any affiliated person 
of the Regulated Funds or Affiliated Funds will receive additional 
compensation or remuneration of any kind as a result of or in 
connection with a Co-Investment Transaction (other than (a) in the case 
of the Regulated Funds and the Affiliated Funds, the pro rata 
transaction fees described above and fees or other compensation 
described in Condition 2(c)(iii)(C); and (b) in the case of an Adviser, 
investment advisory fees paid in accordance with the agreement between 
the Adviser and the Regulated Fund or Affiliated Fund.
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    \16\ Applicants are not requesting and the staff is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
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    14. If the Holders own in the aggregate more than 25 percent of the 
Shares of a Regulated Fund, then the Holders will vote such Shares in 
the same percentages as the Regulated Fund's other shareholders (not 
including the Holders) when voting on (1) the election of directors; 
(2) the removal of one or more directors; or (3) any other matter under 
either the Act or applicable state law affecting the Board's 
composition, size or manner of election.
    15. Each Regulated Fund's chief compliance officer, as defined in 
rule 38a-1(a)(4) under the Act, will prepare an annual report for its 
Board that evaluates (and documents the basis of that evaluation) the 
Regulated Fund's compliance with the terms and conditions of the 
application and the procedures established to achieve such compliance.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20026 Filed 9-9-20; 8:45 am]
BILLING CODE 8011-01-P


